A reader asks:
“How do you set a valuation for a start-up company?”
I’ll answer the question with a few other questions (and answers) of my own:
How much money do you need?
First, figure out how much money you need to run the business for “two rounds” and then add 3 additional months of expenses. “Two Rounds” refers to periods of time in the business to sufficiently provide a test of your product/service/store. The test is to determine if you have a viable product/service that people will pay money for and see value enough to either refer someone else or buy from you again.
For the sake of this example let’s assume you need $50,000 to run the business for two rounds plus the extra 3 months.
If you need to raise the $50,000 you now need to determine a valuation. The question next is: How much of the company will you sell for $50,000?
To read the full, original article click on this link: Setting a Valuation for Your Company | Business Credit Versus Personal Credit | Fast Company
Author: David
Gass
